In its second-largest acquisition, Amazon buys the company for $970 million.
Last year Americans spent upwards of $23 billion on their faithful furred, feathered and finned friends. That’s a lot of Scooby snacks, to be sure, but very little of that spending has translated to the world of e-commerce. But combine the seemingly insatiable demand for pet products and services with an online marketplace growing by leaps and bounds, and it’s not surprising that the Internet big dogs are making early strides to mark their territory.
“We’re laying the groundwork,” says Julie Wainwright, CEO of Pets.com, the San Francisco-based online retailer with a financial pedigree that includes Seattle-based Amazon.com. Though only nine months old, Pets.com is poised to dominate the market, announcing an online marketing alliance with XOOM.com in June as well as a multimillion-dollar advertising and brand-building program with TBWA/Chiat/Day San Francisco (whose creations include the immensely popular Taco Bell chihuahua).
Now, though, Pets.com has a competitor nipping at its heels. PETsMART.com, which debuted July 1, is the online whelp of PETsMART Inc., the Phoenix, Ariz.-based powerhouse provider of pet food, supplies and services, and PetJungle.com, an Internet start-up created by Pasadena, Calif.-based idealab!, whose other online success stories include eToys and GoTo.com.
“Since we’re already the largest catalog company in the pet business, we understand fulfillment issues as well as one-to-one marketing issues,” says Rick Horn, senior vice president and general merchandise manager for Pasadena-based PETsMART.com. With some 500 locations in the United States, Canada and the United Kingdom, 12-year-old PETsMART basically invented the pet superstore, Horn notes. Another confidence-raising factor, he adds, is that the PETsMART name is already a recognized brand in 44 states. Its inaugural Web site will focus on how to recreate the best experience for the customer by identifying the right products for his or her particular needs. “We want to enhance the bond between customers and their pets and encourage them to be responsible pet owners,” Horn says, noting that some 200,000 dogs and cats were adopted last year through the chain’s existing pet adoption program. “We think that the online world is a great way to communicate this ideal.”
Pets.com, meanwhile, isn’t rolling over and playing dead. The company had plans to launch a completely reworked Web site in early July, according to Wainwright. “We’re redesigning it to be more shopper-friendly by adding a lot more product, beefing up the product information and providing more pet-related advice to our customers,” she says.
Kate Delhagen of Cambridge, Mass.-based Forrester Research sees a limited window of opportunity for a pure-play company such as Pets.com to establish a presence before the bricks-and-mortar companies set up shop. Pets.com “has a killer URL, which is the equivalent of a great location,” she says. “But PETsMART is part of a resurgent trend among the bricks-and-mortars. The challenge is to streamline the process to reward
The biggest question facing Pets.com is how well it can capitalize on what is its largest asset-its relationship with Amazon, which purchased a 50% stake in the company this spring. PETsMART, meanwhile, is following the lead of other established retailers like Barnes & Noble. “They have the speed of activity and right mindset,” says Delhagen. “I call it Internet DNA-it’s a sign that they get it.”
Ultimately, both pet supply companies, though coming from opposite ends of the business spectrum, hope to have Web sites that contain solution-oriented content, tapping into lifestyle issues common to all pet owners. And that’s one thing that Pet.com’s Wainwright and PETsMART.com’s Horn have in common: They’re each proud dog owners two times over.